Probate: What it is, why people fear it

When it comes to administering a descendant’s estate, there is a legal process called probate that oversees the settlement and distribution of the assets.

This process, which guides the legal acceptance of a will (if there is one) and appointment of an executor, essentially wraps up a person’s legal and financial affairs after his or her death.

Supervised by your state’s probate court, this is a formal practice that most Americans don’t want to talk about, let alone experience.

In fact, probate is something many try to avoid altogether (primarily by setting up trusts). After all, it is considered stressful and objectionable.

Here’s why:

Probate can be time-consuming

One of the biggest concerns is the amount of time probate takes. And this is a legitimate concern. Sure, many states have simplified or streamlined the process over the years, but the bottom line is that probate cases are generally a slow procedure, especially in big legal markets (like New York or Los Angeles), said attorney Hugh Drake, partner at Brown, Hay & Stephens, a full-service law firm engaged in the representation of corporate and business entities, public institutions, and individuals in a diverse range of legal disciplines.

“It’s more formalistic in these markets," he said in an interview. "There are more restrictions and the courts are congested. The scheduling — getting in and out of probate — is difficult.”

Regardless of where you live, you’re most likely looking at a process that typically runs six to eight months, depending on your state and the size of your estate, as well as other factors such as the type of assets owned, form of ownership, tax issues, creditors’ claims, marital property issues, and whether a business is involved.

“Owning a sole proprietorship is a lot more complicated than owning stock in a business, and if there are disputed matters that pertain to a sole proprietorship, you have to get permission from the judge to make decisions,” said Drake. “That can be onerous.” (Learn more : Succession planning for your business )

Probate: Lengthy and complex

The process, which often involves extensive paperwork and tedious tasks, can become even more cumbersome if family members disagree. For example, inheritors can file petitions over the handling of the estate or assets, or contest the will, or challenge the validity of the will because they’re not named in it (when notified).

“Issues can and do crop up, particularly when someone isn’t happy with what they’re receiving or what they’re not receiving,” said attorney Ilana Davidov, a founding partner at estate planning firm Davidov Law Group, in an email exchange.

One of the biggest drivers of conflict is the modern family, said Davidov. “It’s usually children of the first marriage versus a surviving spouse – a stepmother or stepfather,” she said. “Without mom or dad as an intermediary, the gloves come off. It’s often more about the relationship than the money.”

“Litigation can kick around for years and everything is on hold until it gets resolved,” added Drake.

Privacy concerns during probate

Probate is a public process. Extensive documentation and paperwork eventually become a part of public records. This means that anyone can access and read court files and be privy to a deceased’s estate and the value, as well as the names and addresses of the beneficiaries.

This can result in unwanted attention from nosy neighbors, family members who feel the executor is hiding something from them, and even solicitation, said attorney Ray Prather, a partner at Prather Ebner, which focuses on trusts, estates, and exempt organizations.

Sometimes, the solicitations come from those with less-than-honorable intentions, added Davidov: “Who is it easiest to appeal to and who is most vulnerable? Someone coming into an inheritance who may not be able to manage it.”

Expensive proceeding

Probate can be costly. What makes up the lion’s share of the costs? Attorney's fees, said Drake. That’s usually an hourly fee (in a few states, lawyers charge a percentage of the gross value of the estate as their fee), and it adds up — particularly if there are multiple attorneys involved (as would be the case if there is, say, a vacation home in another state).

“This drives costs up rather quickly,” said Prather.

Beyond attorney fees, there are court costs, newspaper publication fees for publishing the estate appointments, appraisal fees, and other potential costs. And fees vary from state to state.

Tally it up and you can count on probate taking anywhere from $5,000 to $10,000 of your assets away from your beneficiaries, said Prather.

“For 80 percent to 90 percent of the population, this is what probate costs, on average,” he said.

This figure, which doesn't include estate and income taxes that may be due and payable during the course of the probate administration, can cause family angst, particularly if it’s a parent who has died, said Prather.

“Family members feel they should have total ownership of this money; they all have their hand in the pot and think that it should all be theirs,” he said. “That’s just the way they see it.”

One of our financial advisors can contact you to discuss taking care of loved ones, a family business, or a group of employees.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel.Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.

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